Discounts Dominate, But Loyalty Program Rewards Go Deeper Than Dollars

Discounts Dominate, But Loyalty Program Rewards Go Deeper Than Dollars

You’d be hard-pressed to find a shopper who doesn’t like to save money or earn cash back for purchases, so it should come as no surprise that financial incentives are the primary reason why most say they participate in retail loyalty programs. In fact, two-thirds of global respondents who say they participate in loyalty programs (67%) somewhat or strongly agree that they join these programs only to get free products or discounts.

When it comes to the most-valued loyalty-program benefits, monetary incentives top the list in every region, by a wide margin. More than half of global loyalty-program participants (51%) say product discounts are among the three most valued benefits, and discounts are particularly popular in Europe (62%). Fewer global program participants (45%) say rebates or cash back are among the most-valued benefits, but cash back is slightly more popular than discounts in North America (49% vs. 46%) and Latin America (48% vs. 47%).

However, creating meaningful differentiation requires offering more than generic deals, and thinking beyond monetary perks can help brands stand out. Non-monetary benefits that provide lifestyle benefits or offer exclusive access also are valued by consumers around the world, including programs that give frequent flyer points (22%), exclusive access to sales or merchandise (15%) and higher priority service (12%).

Financial rewards are the most highly valued loyalty-program benefits for members of all ages, but younger loyalty-program participants value a few non-monetary benefits more highly than their older counterparts. Fifteen percent of Millennials say higher-priority service, such as first-class seating or VIP customer service is one of their top three loyalty-program benefits, more than double the percentage of Baby Boomers and Silent Generation respondents (6% of each group) who say so. In addition, 12% of Millennials say their most-valued benefits include personalized products or service experiences, and 10% say the same of charitable donations. These response rates are more than three times higher than for Baby Boomers (3% for each type of benefit) and Silent Generation respondents (4% and 3%, respectively).

“While tangible discounts are a usage driver for loyalty programs, share-driving programs go far beyond these benefits,” said Louise Keely, executive vice president, Nielsen Global Retail Practice. “Tailoring loyalty benefits for specific consumers and using the loyalty program engagement vehicles—be it via an app, email, or in-store interaction—allow retailers to personalize the loyalty program so that it’s not just a discount vehicle. Providing advice, tailored offerings, and other services will delight the loyalty-program member. In this way, there is no one loyalty program—each shopper will have his or her own version of the program, tailored to his or her specific needs.”

Other findings include:

Nearly three-quarters of global loyalty-program participants surveyed (72%) agree that, all other factors equal, they will buy from a retailer with a loyalty program over one without.

Digital loyalty-program tools and features are particularly appealing in the Asia-Pacific region.

Flexible loyalty programs are appealing worldwide, with 81% of global respondents saying they’re interested in earning rewards regardless of whether a purchase was made in store, on a website or mobile device.

Fewer than half of Latin American respondents (44%) say they belong to one or more loyalty programs, the lowest percentage in the survey.

About the Nielsen Global Survey

The Nielsen Global Loyalty-Sentiment Survey was conducted March 1-23, 2016, and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample includes internet users who agreed to participate in this survey and has quotas based on age and sex for each country. It is weighted to be representative of internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of ±0.6% at the global level. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% internet penetration or an online population of 10 million for survey inclusion.

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